Question 1

Most business purchases can be classified as belonging to one of three types:

Accepted Answer

The three types of business purchases are modified rebuy, new-task, or straight rebuy. Delinquent and reciprocal are not types of purchases, and repetitive and delayed are not included in the list provided.

Question 2

Justin's Lawn & Lot is a small business that provides landscaping and lawn-mowing services in the spring and summer. Justin's usually contracts with customers on an annual basis, with the terms set out at the beginning of the season. This year, the area experienced a significant amount of rain, causing the grass to grow more quickly. Justin's was required to cut the grass every time it grew 2 inches, and no matter how many times it needed cutting, the customer paid the same monthly amount based on the original contract. The price of gas has now grown by 35%, causing Justin's to pay more for their supplies. The demand for gas despite its price represents ________ demand for Justin's Lawn & Lot.

Accepted Answer

The fact that the customer pays the same monthly amount regardless of how many times the grass needs cutting suggests that the demand for Justin's services is inelastic. Additionally, the increase in the cost of gas may affect Justin's profitability, but it is unlikely to significantly reduce demand for their services.

Question 3

The fact that business customers purchase products to be used directly or indirectly in the production of goods and services to satisfy customers' needs means that demand for business products is

Accepted Answer

The statement in the question describes derived demand, where demand for a product is derived from the demand for the final goods/services produced using that product. This type of demand is specific to business products and is not seen in consumer products.

Question 4

Inelastic demand simply means that

Accepted Answer

Inelastic demand means that a change in price will not have a significant impact on the demand for the product. This means that even if the price increases, buyers will still buy the product at a similar rate, and if the price decreases, the demand will not significantly increase. Therefore, option C is the correct answer. Option A is incorrect because modified rebuy is a decision-making process for business organizations and has nothing to do with the concept of inelastic demand. Option B is incorrect because an increase in price will not always lead to a decrease in demand, especially if the product has inelastic demand. Option D is incorrect because it describes the concept of elastic demand, which is the opposite of inelastic demand.

Question 5

The United States Army purchases uniforms from a single supplier. For the last 25 years, the trousers purchased from this supplier have not changed and have been bought every six months, in seven different sizes. This example is called a

Accepted Answer

This is a straight rebuy because the Army continues to purchase the same product, without any changes, from the same supplier over a long period.

Question 6

When a business is making its initial purchase of an item to be used to perform a new job, it is known as a ____ purchase.

Accepted Answer

A new-task purchase refers to when a business is making its initial purchase of an item to be used to perform a new job. This type of purchase requires thorough research and decision-making as it is a new product for the company.

Question 7

Barney Supply's sales and sales force have continued to expand. Now, the firm plans to add a fleet of company cars as part of its sales compensation package. For Barney Supply, these vehicles would represent a ____ purchase.

Accepted Answer

Adding a fleet of company cars is a significant purchase and represents a new task for Barney Supply. They have not done this before and would need to evaluate options and suppliers, as well as make decisions on financing and maintenance.

Question 8

Memorial Hermann Hospital decides to redo its kitchen with new flooring, cabinets, counters, and appliances. The hospital compiles a description of the project and then asks sellers to submit bids. After determining the most attractive bids, the hospital will then work with two or three companies to determine who will get the contract. This is an example of using ____ for a purchase decision.

Accepted Answer

This scenario describes the hospital asking sellers to submit bids, which is a negotiation process where the hospital will be comparing and evaluating the best offers to select the best option. The other options, such as sampling, inspection, elimination, and description, are not applicable in this case.

Question 9

Which method of business buying is necessary when products are highly homogeneous and examination of each item is not feasible?

Accepted Answer

When products are highly homogeneous and examination of each item is not feasible, sampling is the best method of business buying. This involves selecting a representative group of products to examine and evaluate, rather than attempting to evaluate each individual item.

Question 10

Firestone is a manufacturer and marketer of tires for new passenger cars. In recent years, the company's business has declined because of the overall decrease in consumer demand for new cars. In this case, the demand for Firestone's tire products is said to be ____ since it depends on the demand for new cars.

Accepted Answer

The demand for Firestone's tire products is derived from the demand for new cars, meaning that it is dependent on the demand for another product, in this case, new cars. Therefore, the best choice is (C) derived. The other options, such as inelastic or elastic, refer to the responsiveness of demand to price changes, which is not directly related to the situation described in the question.

Question 11

Which of the following products is most likely to be purchased on the basis of contract negotiation?

Accepted Answer

The answer of Which of the following products is most...

Question 12

HEB Supermarkets recently placed an order with the Pederson Corporation for hotdogs. The typical weekly order is for 10 cases; however, since the upcoming weekend includes a holiday, this time HEB is ordering 100 cases of hotdogs. HEB orders this product on a regular basis. What type of purchase does this week's purchase represent?

Accepted Answer

This purchase represents a modified rebuy because while HEB regularly orders hotdogs from the Pederson Corporation, the increase in order quantity due to the holiday represents a modification of their usual order.

Question 13

A representative product taken from a lot or batch, evaluated, and purchased refers to

Accepted Answer

The process described is known as sampling, where a representative product is selected from a larger lot or batch for evaluation and potential purchase.

Question 14

Inelastic demand in business markets refers to a situation where

Accepted Answer

Inelastic demand means that changes in price will not significantly affect the demand for the product. This is often the case with products that are necessities, have few substitutes, or are urgent. In business markets, this can apply to products that are essential to the production process or are integral to the functioning of a business.

Question 15

Clay Distribution Company has purchased 15 forklifts over the past two years. As it plans to place its next order for another five machines, management wonders if additional features may be needed in order to handle changes in the product lines it carries. For Clay, these new forklifts represent a ____ purchase.

Accepted Answer

The purchase of the new forklifts is a modified rebuy because the company has previously purchased forklifts but is considering additional features to handle changes in product lines. This means that the company is modifying its previous buying decision and is open to considering new options.

Question 16

Demand for business products is characterized as derived. From what is the demand derived?

Accepted Answer

The demand for business products is derived from the demand for consumer products, as businesses purchase goods or services to produce other goods or services that consumers ultimately buy.

Question 17

A representative from Pepsi stops by at a local fast-food restaurant once a month to inquire how much soft drink syrup the store will need. The restaurant's orders are an example of which type of business purchase?

Accepted Answer

The restaurant's orders for soft drink syrup are a routine purchase that they make on a regular basis. This type of purchase is known as a straight rebuy, where the customer simply reorders the same product from the same supplier without much evaluation or consideration of other options.

Question 18

The EZ Pawn Company is a regional business that owns seven pawn stores in the Houston area. The owners of EZ Pawn have recently purchased a new software system designed to better track their inventory. Now that they have had the system for a couple of months, they have decided to upgrade to a newer version. The original purchase is an example of a(an) ________, while the current purchase will be a(an) _____.

Accepted Answer

The original purchase of the software system represents a new task, as it was a new requirement for the company. The decision to upgrade to a newer version of the software is a modified rebuy, as it involves revisiting and modifying a previous purchase decision.

Question 19

All of the following describe the demand for business products except

Accepted Answer

The demand for business products is typically derived, joint, inelastic, and fluctuating, but not necessarily elastic. Elastic demand refers to consumer products where demand changes significantly with price changes, which doesn't specifically describe business products' demand characteristics.

Question 20

Demand for business products is also known as ____ demand.

Accepted Answer

The demand for business products is derived from the demand for consumer goods and services. Businesses buy raw materials, parts, and components to manufacture finished goods that are sold to consumers. Therefore, the demand for business products is derived from the demand for consumer goods.

Quiz 7: Business Markets and Buying Behavior